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Closing Bell With Maria Bartiromo

News/Business. Maria Bartiromo. Analysis of the day's winners and losers in the stock market. New.

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01:00:00

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San Francisco, CA, USA

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Virtual Ch. 58 (CNBC)

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mpeg2video

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ac3

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704

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480

TOPIC FREQUENCY

S&p 17, Us 16, Washington 7, U.s. 6, Sandy 6, Boston 6, Moody 's 4, Citibank 4, America 3, Schwab 3, Blackberry 3, Caroline 3, Doug 3, Hackensack 2, Superstorm Sandy 2, Scott Cohn 2, Mary Thompson 2, John 2, New York 2, New Jersey 2,
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  CNBC    Closing Bell With Maria Bartiromo    News/Business. Maria Bartiromo. Analysis of the  
   day's winners and losers in the stock market. New.  

    February 8, 2013
    4:00 - 5:00pm EST  

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>> okay. heading towards the close. the s&p is up about seven point. that's enough for a duane for the week and that will give us six straight weeks that the s&p is up this year. first time i think in 40 years that the -- 42 years that the s&p has been up six weeks to begin the year. nasdaq same things, six weeks in a row. back to a 12-year high for the nasdaq. the dow will be the laggard. needed to be up 66 points to be positive for the week so it will end its win streak at five weeks. kenny on the floor of the new york stock exchange, you have to admit these markets are getting tired, don't you think is. >> they are. today very interesting. can feel it on the s&p. 1525 a real technical level of
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reitivityins, and can you feel that the market wants to test that on the s&p. personal the dow is not making a high. it continues to march higher which is a very, very positive sign. >> you inclined to still be in this long. >> i'm inclined. i would think it would get a little more defensive and i think it will hit real resistance there and then back o.every time it backs off there's always plenty of buyers around. so far. >> get home safe, my friend. >> that will do it. we'll go out mid-range and call it as the markets in new york, boston, all over the northeast are getting ready for the blizzard. all of you get home safe if you haven't already. the second hour of "closing bell" under way right now with maria bartiromo. and it is 4:00 on wall street. do you know where your money is? hi, everybody of welcome back to the "closing bell." a stormy "closing bell." i'm embroemo. t the s&p posting six straight weeks of gains for the first time since 1971.
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see how we're settling out on wall street. the dow jones industrial average tonight up about 41 points, a quarter of a% higher at 13,984. s&p 500 picked up 7.66 points and the nasdaq composite the big winner on the ses, technology in the lead, up 27 points on nasdaq at 3192. last trade there. the dow couldn't push high enough to make it a winning week though but the s&p did making it the first time in 42 years it's recorded gains in the first six weeks of a year. nasdaq closing at a 12-year high. joining me now to talk more about the markets and how you should be invested. stephanie link, brian relling and brian gendrou and our own rick santelli. good to see everybody. nice to see you. stephanie link, let's navigate next week and say how you're invested. what do you think about today's move. >> today's move is pretty impressive. >> i'm kind of happy that you asked before is the market getting a little tired. not really going at the same
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rate higher. that's good. we don't want to go up another 6% so quickly and i think the fact that everyone is still saying that we are going to have this correction that they want to buy the dip, i think you might not get it. might get it in certain stocks but not necessarily the overall market and there is your opportunity. you want to pick on the weakness. yum brands got hurt really hard earlier in the week. now back above where it was of they disappointed in earnings. schlumberger, same thing. you really want to focus on your stocks, a very stock-picker's market right now and use the weakness to be buying, to be adding. >> brian, do you agree with that? do you think we've missed this rally? the market has been having a rip roar beginning of the year, that's for sure. >> long term i think the rally continues, though we may be in for a few butchs here as we approach march and the issues in washington, the spending cuts and the budget. >> okay. so going into some of these
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issues coming out of washington you think we could get noise and disruption. you want to get into the markets at better levels? >> we're overweight equities. if we got a selloff we'd be buying more through some of the volatility, but, you know, whether that selloff comes or not, longer term investors should be looking to overweight equities. >> rick santelli, what about that trend? do you believe in it yet? >> no, i definitely do not. as a matter of fact, treasuries, boons, guilds, i think they will be fighting a lot in terms of keeping yelds down over the next couple of months and rest of the year, but where you are seeing significant cracks is in all the high yields. i'm not the only one talking about it, but whether you look at spreads on some of the barclays indices or the jnc or the hyg etf, they are making new lows for this year. can you see the charts, and in terms of the sequester, i agree
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with the last guest. in many ways between the fed and the deficit spending on the deficit level, even though it's going to be smaller this year, it's hard to beat, that so i think the sequester, where we really demonstrate that the growth in many ways is paid for because when you stop it's going to take away jobs, those kind of black reality swans will be the issue for the market ahead. >> brian gendron, where are you on this and how do you want to be invested? >> we don't think this rally is over entirely. if you extrapolate a 5% or 6% return we've had so far this year, we'll have one of the greatest stock markets of all time in the face of, you know, good earnings but not great earnings, in the face of still slow growth. i think that's a little unrealistic so we'll probably get a little bit of a pullback, unusual if we didn't. still recommending a substantial allocation to equities. this year looks like last year, political uncertainty. last year was a good year for stocks. as for stocks versus bonds, i've
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been thinking it was the end of a 30-year bull market in bonds for the past three years. by the same token, and i've been wrong, and by the same token every fixed income fund manager i know thinks that interest rates, bond yields, are path logically low for the ten year below the rate of inflation. that can't last. the thing is no one knows how much longer it will go on. meantime, people are going to get increasingly tired of getting half a percent on one-year cds and less than 10% -- less than 2 os on ten-year treasuries. >> yeah. what about the idea that this is very much fed drive, the federal reserve creating this environment where there's few alternatives and it's not necessarily driven by fundamentals. so do fundamentals not matter. >> the fundamentals are still good. we're still looking at fairly attractive, s&p 500, only about 13. i think the fundamentals are there, and the fed hasn't gott gone away yet. the fed hasn't taken await punch
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bowl yet. >> maria, i would just add that i think earnings have been really very impressive, and that's the big difference in my mind this year versus last year. in addition to all this stimulus, global stimulus, earnings are actually a lot better. i know the expectations were low, but no one was thinking 6% to 7% earnings growth and, okay, fine, revenues are growing at 2.2%, but that tells me margins are actually holding up which is the other case that everyone thought margins were going to roll over, the resiliency in the face of what we just went through in the fourth quarter and i think that's actually very impressive and i think the stocks will continue to work higher as earnings continue to improve. >> you also have to mention valuations and you're also seeing valuations, you know, not outsized. it's certainly a different environment than we were looking at in the '90s when you had, you know, very, very high pes. that's not case right now. >> particularly in the lower interest rate environment, too. >> right. >> what do you want to look at
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next week, rick? what's on your radar in. >> 66 billion in sly. 3s, 10s, 30s, tuesday, wednesday and thursday, of course, as many guests have mentioned. retail sales, the big data point, but i always like to monitor supply and see how investors are looking at a slightly higher rate environment to some of the auctions towards the end of 2012. >> that's a good point. how do you think name packets the market, all the new supply coming on? >> well, actually i think it may refocus the argument because even though 195, as our guests said, below the inflation rate, still better than the 140 to 160 area we traded at for a large part in the middle of 2012. >> brian rehling, what's your take? >> you know, i'm sure there will be pretty good demand next week in the short term, but when you're look to allocate your money, even if interest rates stay low and we don't get a rise in yield, you know, there's no money to be made over there. you're working on such slow yields and coupon levels that it's going to be very hard just
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to beat inflation so we think you're better off overallcating on the equity side where we do think there's a little bit more upside. >> and you're expecting weakness next week in the bond market, right, because of all that supply? >> right, typically might get a little bit of weakness in front of the supplies, the dealers clear off the shelves to be able to buy a little bit cheaper and then you see some strength after the auction. >> and so we could see higher rates there. thanks, everybody, really appreciate your time tonight. >> thanks, maria. >> thank you. >> we'll see you soon. the dow posting its first down week of the year but the nasdaq closing at a 12-week high. let's get to josh lipton, running through the week's biggest winners and losers. >> winners an laggards, starting with the s&p 500. the winners show a broad mix of names this week from ralph lauren and netflix driving much of the action.
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apple a lot of talk and market watchers debating what the tech giant should do with its big pile of cash. credit ratings agencies getting drilled on legal risks and continued fallout from the financial crisis. acamai technologies takes a tumble after reporting slowing revenue growth. united health and beverage giant coca-cola and american express higher by over 2%. in the red, caterpillar and big pharma, a cautious earnings forecast and concerns about its drug pipeline weighing on shares of merck. maria, back to you. >> forget the bulls versus the bears. an entire year of snakes to worry about. the chinese new year sunday marks the beginning of the year of the snake. historically usually it's terrible for stocks, and this isn't silly stuff. some banks are putting out note on this. we'll have details on the year of the snake and how it impacts you, and the so-called storm of the century is here. we've got very latest forecasts which are getting works by the way. plus the president of utill
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welcome back. it may sound silly to forecast the direction of the stock market based on the chinese calendar, but my next guest says stocks have historically underperformed during the year of the snake which happens to kick off this sunday, and this year is no exception. in a note written for rbc capital markets amy wu says it's more than just a fun fact. there's hard data to back that up. amy wu joins us now to make her case and also with us is chris constantinos who says this year investors will not get snake by then. thanks so much for joining us. this market can really be influenced by the chinese calendar. >> for the superstitious out there it's interesting to know that the year of the snake is the worst performing year on average over the last 63 years, but honestly, the most important fact as an options strategist is that the options market is pricing fears at all-time highs
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which makes me want to proceed with caution. even though you're seeing vix levels at historical lows, you see term structure very steep and normalized skew which is the downside for put demand and people are going out there and pike edges for protection. >> you want to start protecting yourself, raise cash. what are you telling clients to do then? >> maria, think about this. a lot of head winds kind of in movement. had a great january rally. however you've got sequestration on march 1st. you've got the budget which has to be resolved by april 15th and by may you have to start figuring out what to do with the debt ceiling. all we did is kick the can down the road. we didn't solve any problems so from a derivatives perspective all we're seeing is them taking this without money puts and even capping their upside to buy downside and almost zero cost with put spread callers. >> you think that an investor
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optimism is up and you think that's a positive for the markets this year. what's your take on the year of the snake and the implications? >> well, maria, i have to tell you i'm immediately skeptical of any investment philosophy based on horscopes. the only way those things work is there's something else going on, some kind of causation to go with the correlation, and when i looked at past markets, markets like 1965, 1989, 2001, the one common denominator that i found that i don't think is in place in 2013 is valuation. on the price matters framework that we use here at river front, particularly in '01 and 1965, those equity markets started those years of the snake at way above their long-term trend return averages which empirically we found to suggest subpar forward returns. that's not the case in 2013. on the same framework the u.s. market is about 18% below its long-term trend which is positive, and certainly where
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we're more bullish is international markets where in developed international that's 30% plus below the trend. >> which international markets, like japan or what? which markets? >> well, japan certainly is a fascinating case. you know, here's a market that last saw its highs in the early '90s. it's the cheapest -- on a price-to-book basis that's literally the cheapest developed market in the world but it's also been the ultimate value trap for the year. the difference potentially this year is the changes at the bank of japan and the changes politically that are happening that are causing potentially the independents and the bank of japan to be compromised which somewhat paradoxically could be the best thing for equity markets in japan so i think japan is very interesting here. i think broad developed international is interesting. japan and europe both on our models are inexpensive and both have cat lifts that we believe that could help them have very good 2013s.
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>> how do you respond to that, investor sendments being these are the most liquid markets and that you don't have a lot of alternatives given the low rate of rates everywhere. >> i'd say a few things. i'd definitely agree with chris that horscopes are not the way of investment philosophy but frankly what the options market is telling you there's hard evidence behind the fears in the market. it's not just that it's the year of the snake and you should proceed with caution. it's the structure. vix would suggest to you future uncertainty is very high. why is that? i would argue that even though strategically maybe long term we're at better growth, better consumer consumption, the reality is that tactically in the next few months we have a lot of head winds. as i mentioned the sequestration, the tax debates that are coming to the forefront so with volatility at historic lows, why not give it a try in terms of putting on cost protection as we've seen clients do because the fact is it is all
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time lows for the bang for the buck, risk for reward that you have. >> what else can you tell us about the snake, the year of the snake that may play into this argument? >> as far as i know it's a black water snake so it moves a lot so hopefully that means more volatility for us in the future. that's about as much as i can get as an astrologist. >> in terms of chinese new years other years, away from the snake, i mean, did they have any impact on the markets in the past? >> no. >> it's just a conflins of negative things. >> last year was the year of the dragon but obviously we've seen a lot of volatility in years like that. 2008, for example. look, the fact that we have this astrological sign but more importantly we have this lineup in options land with the vix and with the implied volatility levels. >> is there traditionally a rally after the selloff? can you look in terms of cycles, do we know what happens after, if in fact we do have a tough
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year? is it followed by buyers? >> that i don't know. i think what you would be looking at in terms of the options market is the uncertainty through the term structure is sort of telling you that not only is it low now but the future is much more uncertain and there are different things that you can lock at in terms of what to price now for the future, so, for instance, looking at may, looking into august, it actually is telling you the high uncertainty is probably because of the budget cuts. it's probably because looking at debt ceiling in the future. it's much more about what the lineup is because of how the temp structure has set up. >> chris, i know you're expecting a good year for stocks, but do you think that we're going to have some selloffs around these issues in washington, sequestration, the budget cuts to come. are you going to be buying on the dip if that were to happen? >> yes, maria. in fact, i agree with amy on the u.s. markets. i think it's going to be a little bit of tough sledding
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specifically because of sequestration and because of the fact we're starting right at this moment at fairly high investor sentiment levels, and the interesting thing, really a question of time horizon, amy's time horizon is maybe a little bit shorter than how we invest, but the interesting thing is what we found in studying investor sentiment is even when it's at optimistic levels like it is right now, that tends to mute forward returns from say zero to a couple months ahead time frame. it's actually a good thing from a nine to 12-month going-forward period because what it's suggesting is animal spirits have indeed started to return to the markets which tends to be from a longer term perfespectiva positive thing for equity gains. >> which groups do you think lead that rally, chris? >> well, you know, where we're finding value in the u.s. increasingly is in the -- in the junkiest areas, in the cyclical areas and high beta areas is where we're fining the biggest valuation discount, and, that
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combined with the fact that some of the macro indicators on global growth have appeared to have bottomed should be a positive catalyst for those spaces and you have to look at developed international in general as a place that has a lot of room to the upside if -- if things continue to be constructive. >> all right. we'll leave it there. chris, good to have you. amy, thanks very much. we'll be watching and certainly we'll be watching the year of the snake. we'll see you soon. nemo blasting through the northeast. the worst is yet to come, we're toe. we've got the storm covered from boston to the big a. wait until you hear the latest forecast for this blizzard coming at us and is moody's the next shoe to drop. it somehow managed to avoid a justice department lawsuit, but perhaps not for much longer. back in a moment. tdd#: 1-800-345-2550 seems like etfs are everywhere these days.
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welcome back. is moody's next. the lawsuit against standard & poor's mortgage ratings has raised questions about why it did not slap a lawsuit on moody's as well which had similar rosy ratings. cnbc correspondent scott cohn with the story. >> reporter: why isn't the justice department targeting standard & poor's when it was by no means the only ratings agency that slapped rosy ratings on what turned out to be junk securities. what about moody's & fitch. justice department officials were no help when asked about that on tuesday. >> this case is about s&p.
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we're here to talk about s&p. to the extent that there are or are not other pending investigations going on, we're not going to comment about that. >> all you've got to do is read between the lines in this $5 billion complaint, and it's pretty clear the other rating agencies are not out of woods. the whole case against s&p is predicated on the idea that s&p was lowering its standards and ignoring them in fact in response to other agencies that had already done the same thing. august 2004 a senior executive write the structured finance team is aware of the competitive threats that moody's is taking in mortgage-backed securities and has authorized us to take certain actions. is moody's next on the government hit list in the justice department still won't gent, and moody, of course, said it did nothing wrong. how high are the stakes? this week standard & poor's hired john kee ker for the case, as tough as they come and tough and shrewd behind the scenes. don't rule out a settlement in this case and maybe some sort of
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industrywide global settlement like the one that followed the wall street analyst scandals of a decade ago. maria? >> scott, let me ask you. why is the u.s. suing only s&p if they have evidence against the other ratings agencies. they apparently do have the evidence. >> part of it is a question of resources. a big suit. it will take a lot of smart lawyers, and they are also trying kind of a novel legal strategy, as you know. they are using a law had a was passed after the savings loan scandal and to some extent they want to see how it works. it's a little bit of a test case. remember with the analyst scandals back a decade ago. first eliot spitzer went up against merrill lynch and then against the other research firms. >> do they have the same kind of damaging e-mails at moody's that they have at s&p? >> presumably they have at least as many e-mails, whether they are damaging or not will be up to courts to decide. they were able to get into all of these. remember, back in 2008, a big congressional hearing with all three of these firms on the hot
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seat, and all of them responding to e-mails of the same kind that wound up in this civil complaint against s&p so you can presume, that yes, they have a fair amount of e-mails from moody's, a fair amount from fitch's, and the question is when and how will they use them? >> now, is there a danger of putting these firms out of business, scott? >> that's the issue. >> again, if you keep comparing this to the analyst scandals, south side research is nothing like it was, and can you argue that gave rise to a lot of other unintended consequences like a lot of insider trading, so if we get rid of these ratings firms and all the important functions that they have, what will that mean to rating this kind of debt that's out there and that's the question. a lot of others out there that you know that have alternatives and alternative models. this is one that's worked for many, years. that's the risk here if the justice department pushes too hard and the settlement turns out to be unintended
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consequences, we'll have a big vacuum with important vfgs for investors. >> scott cohn, i know you'll be on it. nor'easter nemo unleashing powerful winds, blinding snow and a travel nightmare. thousands of flights have already been cancelled. amtrak service between new york and boston suspended. the latest on nemo's assault coming next. remember superstorm sandy which knocked heat and power out for millions of customers. i'll speak with the head of one of the biggest power companies in the northeast and president obama now warning that drastic spending cuts could have a devastating effect on the economy. you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place.
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welcome back. winter storm nemo striking with full force. we've got full team coverage. jackie d'angelis is standing by outside headquarters and mary thompson is outside a home depot in new jersey and jay gray is live tonight in boston. jackie, kick things off for us. >> reporter: good afternoon. moments ago governor cuomo
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declaring a state of emergency. as of now subways in manhattan with fully running and fully functional but we could see closures if things get worse later on. meantime, connecticut has issued a driving ban, this after its governor had also declared a state of emergency earlier. connecticut bracing for about 2 feet of storm potentially from themo. also want to mention that washington power company, pepco, saying that 50,000 of its customers are without power right now after a tree fell. they are working to restore that, and here just a few miles north of the george washington bridge commuters have been advised that the speed limit has been re-reduesed to cautionary 35 miles per hour both ways so people taking caution on the road as things are whipping up and getting much worse. back over to you. >> that is amazing. thank you, jackie. do you need to make a last-minute run to the store for a shovel or a flash lying. mary thompson is already for the storm. she's at a home depot in hackensack, new jersey. mary? >> hey there, maria.
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if you need a shovel or a flashlight you will be in luck, but if you're looking for some of the bigger ticket items like a generator owe snow blower, no such luck. think about this. 50 generators were sold at this store in the last 24 hours. same story with snow blowers. the last one leaving the store at 11:30 this morning. another thing that they are out of, gasoline canisters. you might recall during superstorm sandy people ran out of fuel or their generators ran out of fuel. they don't want to be caught in the same situation in the event the power goes down again today. now, earlier today the store was also out of salt, but then we got a delivery here let's say about 2:30 or so much. caused a little bit of a frenzy here in the store in hackensack. now, if you ask home depot, they will say blizzards typically don't generate the type of sales that you see before or after a hurricane but this time might be different. demand was picking up very early suggesting, of course, people want to be very prepared for nemo because they weren't prepared for sandy. back to you. >> all right.
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thank you so much. mary. nemo expected to slam new england particularly hard with up to 3 feet of snow in some parts. nbc news' jay gray has more for you from boston. jay? >> reporter: you can see the wind really picking up here, the snow continuing to fall though 's b sideways for the most part, starting to accumulate a bit, but as you talked about, we expect to see two to three feet before all of this is over. these conditions only going to intensify through the evening. there's a state of emergency declared here in massachusetts and a driving ban. no one is expected to be out right now. everyone should be inside and riding out this storm. unfortunately, these conditions are going to last a bit longer than we first expected. the blizzard warning in the boston area has been extended now through 1:00 tomorrow afternoon as that wind continues to pick up. back to you. >> all right, jay. thank you so much. utility companies in the northeast are trying to ensure that the lights stay on and the natural gas is flowing as the
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storm begins to increase, and if weather does knock out power it's restored fairly quickly. joining me now is ralph larosa of the public gas and utility corporation that services most of new jersey. this gas line was ahead of the storm and would seem to be a vote of no confidence in the utilities, people running out to get gas. how important is it to you and your peers that you perform well in this storm if in fact there are outages? >> well, you know, certainly we had a lot of empathy for what went on during the last outage. what we saw with the gas stations was really driven by the problems at the refineries. when we started to restore power to individual gas stations, what the challenge was was getting the product out of refinery. we don't see that happening this time because the surge that really was the damaging factor in that last event is not what we expect in this storm. >> talk to us about what you're
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expecting and how you've been preparing for it. >> so, as i said, during sandy had two events. had a surge that took place up the north bay and into long island and high winds that took place and took a lot of the overhead lines out of our power. that's what we're expecting to have happen during this storm is overhead damage but we're not expecting anywhere near the type of damage we saw during sandy. winds are much less. projections in the 40 to 50-mile-an-hour range for gusts so not expecting the type of damage we saw with 90 to 100-mile-an-hour wind we saw with sandy. >> overhead, you think trees will come down, lines will come down shutting out power? >> you'll have some of that. again, much less than it was during sandy. leaves on the trees, that's our biggest nemesis. the trees are the problem and when you have leaves on them just like we had during the october snow storm last year, it was all about the leaves coming down and bending the branches on us. >> that was the issue, the way things came down, yeah. what kind of a potential cost does a storm like this have on a utility like pse & g? how do you plan for that?
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you really can't plan. >> you try to build into your budget for small storms. a storm like this may or may not fit within our budget, depending on the type of damage that we have. certainly during sandy we saw costs that got up into the $300 million range which was much higher than we would have budgeted for and we were regulated to defer those costs off to a future rate case and future discussions from a rate pair standpoint. this type of event use our normal work force and bring in contractors and make sure people have the right material and tools available to respond as need stld what should people be thinking about now to prepare for the lights going out and then losing power? what do you in your fantastic seat that you see so much, what do you recommend that they make sure to have on hand? >> first of all, we hope the power doesn't go out. number one, stay safe. stay away from the wires that are down. you don't know whether it's an electric wire or telephone wire so stay away. >> exactly. >> call us. we don't know whether an individual home is out. we know whether a big line is
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out in the street, but because we don't have smart hearst in our entire service territory in all, in our case, even industry wide, have you to assume that you need to call us and let us know that your power is out and reach out to your local utility and be prepared. it's all about individual accountability and have flashlights, make sure you have water available and batteries for the flashlights so be prepared on your own. >> are you expecting this to be all weekend? what's your expectation in terms of timeing? >> for new jersey we expect most of the severe weather to be out by morning time so we'll be monomonitoring the storm throughout the night. about a third of our work force is on the property respond to respond quickly but most of the work done during the daytime and crews will be coming back in tomorrow morning. >> let me ask you questions about the super bowl. entergy taking responsibility for the power outage at the superdome in new orleans during the super bowl. pse & g provides power to metlife stadium in new jersey where next year's super bowl will be played. how confident are you that you won't have that kind of a problem occur?
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>> we'll take a look at what happened -- just saw this afternoon what entergy came out with. a relay is a fancy word for a gfi that we have in all our homes. it sensed that there was something wrong on the system and opened up a circuit breaker and lost power in the stadium for a miniscule amount of time. it took a long time for the lights to cycle back on and off a couple things we'll do is getting lights that come on much quicker if we do have an incident but we'll be testing all the relays and building as much redundancy into the grid as possible. we'll leave it there. >> good to have you on the program. >> ralph larosa psg & e president. from snowmageddon to economic armageddon millions of jobs could be axed if congress fails to reach a deal on automatic spending cuts on march 1st. the real effects of this mini cliff next and blackberry finishing the first week under its new tick symbol bbry in the black. the stock up better than 40%
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this year. we'll have the blackberry trade coming up in a few minutes. stay with us. this is america. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day... block the acid with prilosec otc and don't get heartburn in the first place! [ male announcer ] one pill each morning. 24 hours. zero heartburn.
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is moving backward. [ engine turns over, tires squeal ] and you'll find advanced safety technology like an available heads-up display on the 2013 lexus gs. there's no going back. welcome back. a dire warning of job loss and economic gloom unless congress acts on automatic spending costs by march 1. john harwood with the story from washington. john? >> reporter: we're back to that familiar game of chicken in washington. republicans saying president obama, you've got your tax increases in the cliff in early january. we want spending cuts now and if
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you don't agree with our spending cuts we'll let the sequester cuts, the indiscriminate across-the-board take effect. the white house said if i get the word out on what this means you wouldn't dare do that. that's what the white house briefing was about. administration economic officials talked about the middle class impacts, talked about 70,000 kids being thrown off of head start and 2,000 fewer food inspections. 540 million less in loan guarantees for small business and 375,000 fewer mental health patients being treated. 10,000 teachers lost, leon panetta, the outgoing defense secretary, has already said that the unacceptable cuts to the nation's defense would result so what we've got to see is whether republicans believe that or whether they believe it's a chicken little kind of argument and some democrats privately on
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the hill think that the sequester cuts might not be all that bad because they cut some of the defense programs that democrats have wanted to for some time. thee weeks to see how this is going to come out. >> amazing that we're up against more deadline. is the white house using scare tactics here or would the cuts really be that bad? joining me now american action forum president and former chief economist for bush 43's economic council and also with us is caroline heldman, professor of politics at occidental college. doug, you first, as bad as the white house says? >> no, nothing has changed since the president invented the august of 2011 except the politics and now he wants to change the spending cuts into tax increases, and obviously that's not going to fly, not with the congress and certainly not with the american people who in poll after poll said we don't like the fiscal cliff deal that raised taxes, no spending cuts and now it's time to see the spending cuts. >> what about that, caroline in
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the white house says thousands of jobs could be lost. other experts are using other numbers. what's your expectation? >> well, my expectation is what it was back in november when mitt romney was make the same claims about job loss and that's based on the congressional budget office' estimate of 1.4 million jobs lost as a result of sequester. so what the white house came out with today was nothing new, simply specifics about where the cuts would come. i'm not sure how republican leadership has made a 180-degree turn on this but everyone agrees there will be job losses and it will slow the economy. the question is how much and where. >> doug, do you think recession fears are overstated here? are you afraid of the sequester kicking in what's the impact? >> certainly it will have an impact but i don't think it's cause for recession. the economy can certainly weather this, and quite frankly if the white house was so deeply concerned about job loss, they should have thought hard about raising $600 billion in taxes at the turn of the year when the economy was growing more slowly than it was in 2010 when the
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president himself made the case that it was growing too slowly to raise taxes on anyone, so this is just scare tactics. when it's to their political advantage to wave jobs around they do. when it's to their political advantage to ignore it they do. the reality on the ground is that there has been zero progress on controlling spending and the debt that it will create, and, you know, the american people are waiting to see that happen. >> caroline? >> well, i would say we've already felt the effects. look at fourth quarter of last year when the private -- private spending and growth was fine but in the public sector the department of justice department and other military cuts resulted in shrinkage overall of the economy so we've already felt the effects of this, even before it goes into place and the entire reason behind it is deficit reduction but our deficit is being reduced because of increased revenues and getting out of wars. the cbo is projecting $835 billion this year, the first time it's been below $1 trillion and 435 billion next year. >> but the reality on the ground
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is the same cbo said that the $600 billion in new taxes didn't make a dent in the deficit, 7 trillion this deficits over the next year, if you roll the clock forward when the economy is recovered and no financial crisis and no overseas wars, no european threat, we're still running trillion dollar deficits so we've made zero progress. >> you have to change that talking point. we have reduced the deficit now 835 billion. it is going down. >> huge progress, oh, congratulations, you're now well above the safety line that history has shown gets countries in country. we remain above that danger zone so there's been no progress made whatsoever on the deficit. you can't make that point. >> you have to look at numbers. look at the cbo numbers what have they are projecting next year. they are going down. you cannot say to me. >> and right back up. right back up. >> when are they going back up? >> the bottom is at 215 and in 2023 we're running $1 trillion deficit and gets bigger every
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year therefore. for ten years we'll have gdp smaller than the gross federal debt, debt to gdp over 100% for ten years. that's not a safe way to run a country. >> caroline, are you saying we should not be focused on the debt and deficits right now? >> deficit and debts are taking care of themselves as we get back to full employment. >> that's just laughable. >> it's not laughable. it's data. >> you're living in a fantasy land. we're pulling out of these wars. >> the debt and deficit are taking care of themselves. you really want to make that claim? >> i'm absolutely making that claim because it's happening. look at what is happening with our deficit. it is shrinking as we get back to bert employment numbers and as we increase our revenues. >> the debt right now is 16.5 trillion. >> and in ten years it's going to be 26 trillion and the gdp will be 26 trillion and ten years from now when the unemployment rate is 5.2%, the deficit will be $1 trillion. >> i would contest those numbers.
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those are not cbo numbers. >> yes, they are. yes, they are. >> and what is happening is that in ten years we are going to return, as long as we don't have wall street send us into another economic meltdown. >> can i ask you another question. if this is such a horrible thing, why is it that the house has passed two bills to get rid of the sequester and replace it with more sensible cuts, the senate democrats have done zero and the president has never put forward a proposal. if this is such a horrible thing when are they going to introduce legislation and do something? >> the senate democrats, first of all, the progressive caucus has come out with something that will increase jobs and reduce the deficit. >> is there legislation that the senate has actually undertaken? >> and secondly -- >> no. >> i'm dealing with the house. the house democrats have actually come out with a plan that would close corporate tax loopholes, that would get us, you know -- >> these are great talking points but they are not action. there's been no action by the president and no action by the senate. >> we'll keep watching this. obviously this conversation front and center. thanks very much to you both. we appreciate it.
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doug, caroline, thank you. >> let's be real. everybody who owns a smartphone and drives has texted at the wheel at one point or another. the practice playing a role in more than a million accidents. god forbid anyone try to start it in the storm in the northeast. at&t has an app that could put a stop to texting while driving. >> drivers are more likely to have an accident while texting n.2011 distracted drivers injured 387,000 people and killed more than >> which features an online pledge, jarring public service announcements and a driving simulator. there's also an app for this. it blocks your phone from sending or receiving texts while driving. the app turns to drive mode,
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anyone texting, gets an auto reply telling them that you're driving. it's not perfect, the app is for android and blackberry only and it sometimes gets confused and thinks you're driving when you're not, but it's an interesting first step in com t combatting the problem. >> all right, john. how long can blackberry shares keep on moving up? this week's gains boosting their stock higher this year. find out whether it's time to prune back your blackberry holdings. back in a moment. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers. recognize me.
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but i am your market data. i know what you're looking for. i'm not chained to your desk anymore. i'm faster and smarter now. and so much less expensive.
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i am your market data. and if i do say so myself, i have never looked better. superderivatives introduces dgx. data done differently. >> the company formerly known as research in motion pulled out all the bells and whistles at its blackberry 10 launch last week. seems to be paying off. the phone maker stock surged better between 25% under a new name and ticker symbol. let's ask brian sutland and "options action" contributor. good start for the week and certainly for the year for blackberry 10 in canada. can we expect that success when it's released in the u.s. in march? >> that will be a difficult
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question. get their loyal customers involved in the product. so the stock certainly trading higher here. option traders took a little bit of profit or add protection here. buying the may 9 puts, we saw that about 1,500 times. they expect to to trade below nine by may. i think rim, the bleeding has stopped. the stock is in a good position and it continues higher. but it makes sense, take a little profit, wait to see if there's pullback in the stock and get past the u.s. launch on the new blackberry 10. >> thanks so much, brian. for more options inside, stay tuned for "options action" straight ahead at the top of the hour. >> no snow day for the stock exchange, a good thing for america. stay with us. [ indistinct shouting ] ♪
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[ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪
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>> and finally today my observation on the weather and capitalism in america. we've heard scary predictions today. a blizzard headed this

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